A 529 Plan is a college-savings plan that allows relatives to invest money to pay for a child's future college tuition; the account grows tax-free. Lily wants to set up a 529 account for her new granddaughter and wants the account to grow to $40,000 over 16 years. She believes the account will earn 3% compounded semi-annually (twice a year). To the nearest dollar, how much will Lily need to invest in the account now?
A 529 Plan is a college-savings plan that allows relatives to invest money to pay for a child's future college tuition; the account grows tax-free. Lily wants to set up a 529 account for her new granddaughter and wants the account to grow to $40,000 over 16 years. She believes the account will earn 3% compounded semi-annually (twice a year). To the nearest dollar, how much will Lily need to invest in the account now?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A 529 Plan is a college-savings plan that allows relatives to invest money to pay for a child's future college tuition; the account grows tax-free. Lily wants to set up a 529 account for her new granddaughter and wants the account to grow to $40,000 over 16 years. She believes the account will earn 3% compounded semi-annually (twice a year). To the nearest dollar, how much will Lily need to invest in the account now?
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